I use encrypted messaging, but if I decide to commit a crime I'm under no delusion that encryption will save me. Why can't the same be true for money?
Typically the markets can afford to compensate people on a day-to-day basis for small crime, but the entire reason bizarre concepts like clearing houses exist is that, from time to time, once every 10-30 years, an entire market can be destroyed overnight because of liquidity or counter-party risk or a combination, or some other situation like fraud. These things happen, and will continue to happen, which is why we should always look to the past when designing markets, and not fall for the folks telling about the wonders of their utopian future.
2. You talk about markets "can afford to compensate people [...] for small crime", but I see no reason why that would be applicable to exchanges. Given that both sides of a trade has to put up money before they can make the trade, the risk that either side can commit any sort of fraud/crime is virtually zero. You can still get hacked/scammed by the exchange itself, I'm not aware of any crypto privacy advocates who think that centralized exchanges should have the right to be anonymous.
3. You talk as if the "utopian future" is vaporware or something, but it does exist in the form of decentralized exchanges. Sure, they're not as good as centralized exchanges when it comes to fees/spreads/execution time, but they do exist and allow you to transact anonymously.
You're describing fraud in a market.
>I see no reason why that would be applicable to exchanges
Anomalous and/or suspicious trades are regularly undone by exchanges.
That's addressed my be later in the comment:
>You can still get hacked/scammed by the exchange itself, I'm not aware of any crypto privacy advocates who think that centralized exchanges should have the right to be anonymous.
what planet do you come from? you ask questions that seem like you have an interest in finance but cant accept the emergent capital markets structures that follow from the practice of finance?
islamic banking may seem weird to you if you are even aware of it, but its a timeless archetype of a certain pattern of relationships and rules that arose in response to a certain envrionment at the time ( which persists into modern day ). this system has probably more in common superficially with crypto than some other ways of organizing economic activity.
using words like archaic shows ignorance of the subject and of humanity. maybe when AI is doing everything and new underlying dynamics exists for the way machines relate, we can have this discussion but even then scarcity and physics exist and some methods of resource allocation have to be negotiated or emerge organically.